Business Funding – Debt Financing, Equity financing & Government loans
“Once, when my mother mentioned an amount and I realized I didn’t understand, she had to explain, ‘that’s like three Mercedes.’ Then I understood.” Brooke Shields
I am sure non of us would want to face that situation in our lives! Here is an insight into Business Finance. From a small business to a full-fledged company, there’s something for everyone.
The perception that many small business owners have is that financing means taking whatever money you can get; the faster and easier you can get it, the better. Unfortunately, this approach doesn’t take into account the fact that getting money for your business involves a variety of considerations, financial and non financial, good and bad.
The first thing you need to do is to identify relevant traits about your business’s financing profile and understand the various financing sources that may be available to you, with an emphasis on practical information on selecting the most suitable sources of funding for your business. Your business’s financing profile explains how your position in the business life cycle influences your financing options, how you can estimate the amount of money you need, and how you can find money in your own back yard by tapping friends, family, and personal assets.
Most entrepreneurs consider their resource pool to consist of whatever personal assets they’re willing to sink into the business, and whatever money they might be able to get through a local bank loan. Yet, a number of alternative (or additional) financing options may be available to you.
- Debt vs. equity shows how the two basic forms of financing differ, and how you can combine them to your best advantage.
- Equity financing explains how your form of business organization can be used to bankroll your business, and the advantages and disadvantages of using venture capital, “angels,” sales of securities, franchising, and employee stock ownership plans.
- Debt financing discusses where and how to get a business loan, and the types of loans available.
- Government loan programs shows how the federal Small Business Association can help to finance your small business, and describes other government financing assistance.